14-63 How Would You Characterize the FI's Risk Exposure to Fluctuations

question 37

Multiple Choice

14-63 How would you characterize the FI's risk exposure to fluctuations in the yen/dollar exchange rate?

• A)The FI is net short in the yen and therefore faces the risk that the yen will rise in value against the U.S.dollar.
• B)The FI is net short in the yen and therefore faces the risk that the yen will fall in value against the U.S.dollar.
• C)The FI is net long in the yen and therefore faces the risk that the yen will fall in value against the U.S.dollar.
• D)The FI is net long in the yen and therefore faces the risk that the yen will rise in value against the U.S.dollar.
• E)The FI has a balanced position in the Japanese yen.

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Definitions:

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to calculate cash flow from operating activities.

Statement of Cash Flows

A financial document that provides detailed information about the cash inflows and outflows for a business over a specific period of time.

Operating

Pertaining to the core activities necessary for a business to function, including production, sales, and distribution.

Financing

The process of providing or securing funds for business activities, making purchases, or investing.